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Cash Discount? – Why Might it Help Your Business?

There are different payment method options to choose from, and customers need and want variety. As a small business, you want to meet their demand; but payment technology and integration come with costly fees to enable credit card processing, which can add challenges for your business.

What we are going to cover today are cash discounts and surcharges.

Cash Discounting and Surcharging are some of the fastest-growing trends in the industry, as well as the most misunderstood, miscommunicated, and are filled with fear-based selling practices.

A cash discount is when an owner posts credit card prices and offers a discount on that price for customers who pay with cash. Overall decreasing the price for cash purchases thus an alternative to credit card processing fees.

A surcharge is when you post cash prices and charge an additional fee on top of that price for customers who pay with a card. This works by applying a small customer service fee on all customer transactions. (This fee is removed when the customer pays with cash or in-store gift cards.)

Cash Discount Programs

The interest in cash discounting is increasing because they offer a way for business owners to offset their payment processing fees. These programs may be very useful/successful for many businesses, they are not a blanket solution for all businesses.

Cash discount programs are not credit card surcharges because they do not levy a fee that is added to a credit card transaction.

There has been much confusion around cash discount programs, as people tend to associate them with surcharge programs.

A few things to consider when thinking about implementing a cash discount program:

  • Do you want more cash payments?
  • Are cash discounts common in your specific market?
  • Do you have repeat customers?
  • Is your product/service discretionary or mandatory?
  • What is your average purchase amount?

Looking at the above questions will help you determine if a cash discount program is what your business needs.